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Questions raised over business rescues during lockdown

04 May 2020 Author :   Alex Eliott

After a month in lockdown, the Companies and Intellectual Property Commission (CIPC) sent out a notice on 4 May that the CIPC will be incrementally ramping up operations from 6 May in line with stipulations provided by Government. Further, the CIPC will start working with a reduced workforce in line with Government recommendations.

In the notice, the CIPC pointed out that it is important to note that business rescue proceedings submitted to the CIPC during the dies non period of 24 March 2020 to 30 April 2020 cannot be regarded as being filed as such days did not exist in law. Further, the CIPC pointed out that business rescue submissions that were emailed to the CIPC therefore need to be resubmitted as of today (4 May).

Alex Eliott, a lawyer at BlackBox Law and a Director of the TMA-SA, challenged this saying that this position is incorrect and unlawful.

Eliott responded to the CIPC saying:

As has been discussed with CIPC previously, as a matter of law a resolution is filed with CIPC when an email attaching the resolution reaches the CIPC email server. So it is not correct to say that resolutions filed with CIPC during lockdown were not validly filed and must be emailed again.

Secondly, the concept of dies non does not exist in company law. It is a concept derived from the rules of Court. In the rules of Court a document delivered (served and filed) during dies non is still validly delivered. The effect of dies non is merely that the time periods to respond to the document and any other consequential time periods do not begin to run until the dies non period ends.

Members of the BRLC including the TMA have published practice notes during lockdown in which they express the view that it is perfectly lawful for company resolutions placing companies into rescue to be filed during lockdown. Many business rescue proceedings have already commenced and the appointed business rescue practitioners have taken steps during the lockdown period to progress these business rescue proceedings. From a commercial perspective this was only to be expected – on Tuesday 24 March, before lockdown started I communicated telephonically to Vuyani that many companies would need to go into rescue during lockdown.

From a practical perspective, why can’t the CIPC simply work through the emails, stamp and return the resolutions and BRP appointments that were filed by email during the lockdown period?

The effect of the notice, if implemented, is where financially distressed companies have entered business rescue proceedings since 24 March 2020, to invalidate all steps taken to date by those companies and their BRPs.

Please can CIPC urgently reconsider this notice as not only is it wrong in law, it will have serious consequences for business rescue proceedings that have already commenced since 24 March.

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